The banks have extended support to UltraTech’s bid, seeking indemnity from Binani Industries against any potential litigation by a consortium led by Dalmia Bharat.

With the backing of lenders, Binani Industries will move the Supreme Court on Monday seeking an out-of-court settlement with banks for its subsidiary Binani Cement, which is facing bankruptcy proceedings.

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UltraTech’s chances of winning the battle for bankrupt Binani Cement strengthened as lenders backed the Aditya Birla Group company's bid, although the banks have left the matter to be decided by the Supreme Court, said sources in the banking and cement industry.

The banks have extended conditional support to UltraTech’s bid, seeking indemnity from Binani Industries, parent of Binani Cement, against any potential litigation by a consortium led by Dalmia Bharat that had been declared the winner with a Rs 6,700-crore offer. UltraTech subsequently announced that it had signed an agreement with Binani Industries to buy out the latter’s 98.47% stake in Binani Cement for Rs 7,266 crore.

“At a marathon meeting on Saturday, lenders decided to give their consent to settle their debt with Binani Industries provided it is approved by the Supreme Court,” said a senior official aware of the development.

“Banks have asked Binani industries to indemnify the financial creditors for all legal liabilities that may arise if Dalmia Bharat moves court against the lenders for an agreement that may happen outside the Insolvency and Bankruptcy Code.”

With the backing of lenders, Binani Industries will move the Supreme Court on Monday seeking an out-of-court settlement with banks for its subsidiary Binani Cement, which is facing bankruptcy proceedings for dues of more than Rs 7,000 crore to financial and operational creditors, said the people cited above.

Binani Industries has deposited Rs 750 crore with HDFC Bank to show its commitment to the deal with UltraTech along with a bank guarantee for the remaining Rs 6,516 crore. It has said the money will be credited to the account within three days of the deal being approved by the Supreme Court.

The Dalmia Bharat-Bain Piramal consortium is also expected to move the apex court on the grounds that the move by the lenders is illegal as they had won the bid. It may be recalled that UltraTech Cement had moved the court asking lenders to reconsider its offer although 99.5% of them had voted in favour of Dalmia Bharat.

Dalmia Bharat has sent letters to all the banks that any settlement initiated by them would be a breach of trust as they have entered into a contract with Dalmia with the latter having paid Rs 600 crore as bank guarantee, said the people cited above.

While Binani Industries is expected to move the Supreme Court on Monday, the bankruptcy court is scheduled to hear the resolution plan submitted by the resolution professional favouring Dalmia Bharat on the same day.